Tax on Compensatory Interest

danny69

I am wondering if there is a way to reclaim the 20% deducted from the Compensatory Interest I received after a successful award from Natwest? 

Natwest were ordered to refund all interest charged, and this included the 8% Statutory Interest. They deducted 20% tax from this, but would it be possible to reclaim this from HMRC? Considering we have a £1,000 allowance, surely this would be classed as interest, like you would get in a bank account? Or is this not the case? 

Thanks in advance of any advice 

MorningcoffeeIV

If you're under the tax threshold, then yes.

 If you're a higher rate tax payer, you'll owe a bit more.

DullGreyGuy

danny69 said:

I am wondering if there is a way to reclaim the 20% deducted from the Compensatory Interest I received after a successful award from Natwest? 

Natwest were ordered to refund all interest charged, and this included the 8% Statutory Interest. They deducted 20% tax from this, but would it be possible to reclaim this from HMRC? Considering we have a £1,000 allowance, surely this would be classed as interest, like you would get in a bank account? Or is this not the case? 

Thanks in advance of any advice 

It is considered interest, as its name implies, and so if you are below the total allowable tax free interest then you can reclaim it. Assuming you dont do self assessment then see https://www.gov.uk/guidance/claim-a-refund-of-income-tax-deducted-from-savings-and-investments 

Obviously plenty of companies will do it for you for a big cut and becoming your long term agent with HMRC (see posts of them going on to claim other things back and not being quick to give back the corresponding proportion)